October 8, 2007

Interest rates unchanged

The interest rate set by the Bank of England has remained frozen once more for the third month in a row at the six year high of 5.75%.

There were some predictions that the governor of the Bank of England, Mervyn King was going to cut the interest rate, however by doing so he may have lost some credibility on the Northern Rock affair and his ability to these financial institutions out in a time of crisis.

The problem is that while interest rates remain as they are, there is the potential for a fall in house prices, which would create an even greater problem for the banks.

Source [Function Pix]